“I am very excited with this discovery that proves that Vaca Muerta and Chubut’s D-129 formation aren’t the only shale deposits we have to exploit in Argentina,” Galuccio said, declining to provide the well’s depth or other details. “The tests are very promising but still it is too soon to provide figures.”

The Agrio formation, which is Spanish for sour, is located in Neuquen basin, the site of Vaca Muerta, the world’s second-biggest shale gas deposit and fourth-biggest shale oil deposit, where Buenos Aires-based YPF and partner Chevron Corp. are producing crude. Today’s discovery occurs two years after President Cristina Fernandez de Kirchner’s government expropriated a 51% stake in YPF from Repsol SA, seeking to boost output.

Galuccio also declined to say which province will get royalty payments as the well’s oil is coming from Neuquen soil while operations are in Mendoza province. He said the test had promising results “in volume, oil component and pressure.”

Petronas Investment

Provincial governors and federal authorities are discussing revising Argentina’s 1967 hydrocarbons law. The outcome will determine how revenue will be distributed from shale formations and future offshore operations.

“We need to update the old law to the new reality that shale and offshore investments require,” Galuccio said. “If we do not offer clear rules to companies interested in coming we won’t be able to secure those investments.”

Galuccio said talks to reach a final joint venture accord with Petroliam Nasional Bhd. are very advanced. Malasya state-controlled Petronas signed a memorandum of understanding with YPF on Feb. 18 to jointly develop shale oil in Amarga Chica field in Vaca Muerta shale formation. Galuccio said he hopes to bring good news on the deal before year-end.